Investment Basics for Teachers

Tawni Hunt Ferrarini (), M. Scott Niederjohn, Mark C. Schug and William Wood
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Tawni Hunt Ferrarini: Lindenwood University
M. Scott Niederjohn: Lakeland University
Mark C. Schug: University of Wisconsin–Milwaukee

Chapter 7 in Teachers Can Be Financially Fit, 2021, pp 71-84 from Springer

Abstract: Abstract Emma, an elementary school technology specialist, learns that she is inheriting $20,000. She now has the pleasant problem of deciding what to do with it. Her first thought was to invest it all in technology stocks. But then she learned some basic rules about investing which stressed to start early, buy and hold, and to diversify. That last rule – to diversify – discouraged Emma from placing all of the money into one sector. Different forms of saving involve a tradeoff between risk and reward. You should identify the level of risk that fits your comfort zone. Some teachers make the mistake of keeping all of their money in the safest forms of assets. The safest kinds of savings include savings accounts, certificates of deposit, money market mutual funds, and bonds. To gain greater returns, however, requires allocating some savings into higher risk assets including stocks and real estate. How do we get a good return while managing the risk? Investing in diversified mutual funds might be just the ticket. Remember, setting up an emergency fund in a savings account of money market mutual fund is like an insurance policy. It allows you to handle financial emergencies without dipping into retirement savings.

Keywords: Investment; Building wealth; Buy and hold; Day trader; Diversification; Dollar cost averaging; Risk and reward; Tolerance for risk; Investment risk; Market price risk; Inflation risk; Interest rate risk; Savings accounts; Certificates of deposit (CDs); Money market mutual funds; Bonds; Junk bonds; Stocks; Real estate investment; Mutual funds; Index funds; Market return; Exchange traded funds (EFTs) Dow Jones Industrial Average (DJIA); Coronavirus (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/978-3-030-49356-1_7

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